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Crude oil swinging sentiment | BNP Paribas Mutual Fund
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Crude oil swinging sentiment

Stock markets in India started the trading weak on a negative note as participants reacted to higher crude oil prices. Market sentiment was impacted after the International Monetary Fund (IMF) lowered India's growth forecast. However, the sentiment got a lift in the latter half of the week following a sharp correction in crude oil prices.

Macro-economic developments

A host of polls and reports by ratings agencies on India’s growth influenced market sentiment during the week. The ratings agency India Ratings has pegged India’s GDP growth for FY21 at 5.5%. However, it expects downside risks to persist. Additionally, it also expects the shortfall in the tax plus non-tax revenue will lead to slippage in fiscal deficit to 3.6% of GDP (budgeted 3.3%) in FY20, after accounting for the surplus transferred by the RBI.

Another report, this one by Thomson Reuters-Ipsos said that it expects consumer sentiment to fall by 7.3% in January 2020. The report added that the pessimism is caused by the depleting confidence around personal spending and investments, which is further augmenting concerns surrounding economic growth. However, the report also showed that confidence for jobs has slightly moved up as compared to the previous month.

Global developments

Oil prices see-sawed during the week due to two opposing developments. Oil prices spiked on Monday after two large crude production bases in Libya shut down due to a military blockade. The market reacted negatively as participants felt that this could curtail crude flows from Libya to a trickle. However, by the end of the week oil prices fell to their lowest in seven weeks on concerns that the spread of a respiratory virus from China may lower fuel demand.

Institutional Activity

Institutional activity during the week has been quite interesting. While foreign portfolio investors (FPIs) have been buying Indian equities, domestic institutional investors (DIIs) have taken to aggressively selling Indian equities. During the period 17th Jan-20 to 23rd Jan-20, FPIs have net bought Indian equities worth INR 1395.75. The bulk of this buying was done on 23rd January 2020. In the same time period, DIIs have net sold Indian equities worth INR 3539 crore.

Source: 
www.nseindia.com 
Bloomberg.com 


Disclaimers: The material contained herein has been obtained from publicly available information, internally developed data and other sources believed to be reliable, but BNP Paribas Asset Management India Private Limited (BNPPAMIPL) makes no representation that it is accurate or complete. BNPPAMIPL has no obligation to tell the recipient when opinions or information given herein change. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. Except for the historical information contained herein, statements in this publication, which contain words or phrases such as 'will', 'would', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. BNPPAMIPL undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. The words like believe/belief are independent perception of the Fund Manager and do not construe as opinion or advise. This information is not intended to be an offer to sell or a solicitation for the purchase or sale of any financial product or instrument. The information should not be construed as an investment advice and investors are requested to consult their investment advisor and arrive at an informed investment decision before making any investments. The Trustee, Asset Management Company, Mutual Fund, their directors, officers or their employees shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages arising out of the information contained in this document.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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